Denver firms agree to $3.8bn merger to create Bakken 'shale king' in US

US based Whiting Petroleum is to buy Kodiak Oil for $3.8 billion. The deal brings together two of the biggest players in the Bakken shale formation. The deal creates a dominant player in North Dakota, the second biggest oil producing state in the US.

The total deal will be
around $6 billion when Kodiak’s $2.2 billion debt is included,
Bloomberg reports.

Kodiak production more than doubled last year, which will
compensate for slowed growth at Whiting.

“This is the right deal, at the right time,” as
Bloomberg quotes Whiting’s Chairman and Chief Executive Officer
James Volker. “It massively enhances the scale of the two
companies combined.”

The deal will make Whiting the biggest producer in North Dakota’s
Bakken shale oil formation, which is considered one of richest
fields in the country’s north. More than 1 million barrels of oil
are extracted daily.

The two companies, headquartered in Denver "across the
street" from each other, have discussed the deal for years,
and they finally came to terms in the past few months.

The deal is expected to be finalized in the fourth quarter of
2014.

The combined company could produce more than 107,000 barrels of
oil equivalent a day, which would overtake the current preeminent
player in North Dakota - Continental Resources.

Production of the new company is expected to grow to 152,000
barrels of oil equivalent per day in 2015, which should translate
into higher earnings per share.

Daily crude production in North Dakota surpassed 1 million
barrels in April for the first time, which made it a bigger
supplier than either OPEC members Ecuador and Qatar.

Currently, Texas is the only US state that produces more crude
oil than North Dakota, according to the US Energy Department.